Drafting an Arbitration Clause That Actually Works

Arbitration clauses are often copied from a template and dropped into a contract without much thought — until a dispute arises and the clause turns out to be ambiguous, unenforceable, or silent on exactly the question that matters. A properly drafted clause is worth the extra attention at signing.

What a working clause needs to specify

• The seat of arbitration (which determines the governing procedural law)
• The number of arbitrators and how they're appointed
• The institutional rules to apply, if any, or that it will be ad hoc
• The language of the proceedings
• Whether the clause covers all disputes "arising out of or in connection with" the contract — broad language avoids arguments later about whether a particular dispute falls within scope

Common drafting failures we see

Clauses that name an arbitration institution that doesn't administer cases in the way described, clauses silent on the number of arbitrators (inviting a dispute about that before the real dispute is even reached), and clauses that don't clearly exclude court jurisdiction for the same matters.

Domestic vs international considerations

For cross-border contracts, choosing a seat and institution with a track record of enforceable awards — and confirming the other party's jurisdiction is a New York Convention signatory — matters as much as the substantive terms of the contract itself.

Our approach

We draft arbitration clauses to be tested against the specific commercial relationship, not lifted from a precedent bank without adjustment.

This article is general information about Pakistani law and procedure, not legal advice for any specific matter. If this touches on something you're currently facing, get in touch and we'll advise on your facts directly.