What is a Model International Commercial Arbitration clause?
A Model International Commercial Arbitration clause is a legally binding agreement between two parties stating that they will submit any disputes to an arbitration process rather than going through the traditional court system. This type of clause is used when two or more companies, or individuals, are doing business together in different countries and need a standardized set of rules to settle disagreements. The two parties involved in the arbitration process agree to follow a predetermined set of rules, determined by the International Chamber of Commerce (ICC). These rules include things such as the language used during the arbitration process, the procedure for submitting and defending claims, the cost of any arbitration, the length of proceedings and the laws that will govern the proceedings. It is important to note that an arbitration clause is not a binding contract between the two parties. Instead, it is a statement of intention that, if accepted, will form the legal basis of a binding contract. This means that each party is still able to reach an agreement on the terms of their dispute without having to involve the court system. The ICC Model International Commercial Arbitration clause is a useful tool for international business transactions because it provides a uniform framework and set of rules for resolving disputes, without the need for a lengthy and costly court process.
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