I take issue with the wording of the standard clauses promulgated by the various arbitration institutions. I’ve written about shortcomings in the American Arbitration Association’s standard clause (see this 2010 article), but the same problems are on display in others.
That’s not surprising—most drafting is poor, so why should arbitration clauses be any different? The standard clauses are all short, so it wouldn’t take much to fix them. I have no compunction about fixing them when I use them in my contracts.
But I didn’t write this post to rag on the arbitration institutions. Instead, I have a challenge for MSCD readers. The arbitration institutions recommend that you supplement their standard clause by specifying, among other things, the number of arbitrators. Assuming you’re appointing three arbitrators and not one, here’s what the International Center for Dispute Resolution recommends:
The number of arbitrators shall be three.
And here’s what the International Bar Association recommends:
There shall be three arbitrators.
We can do better than that. I invite you, dear MSCD reader, to suggest, in the comments, what category of contract language should be used to express this idea and how you would express it.
And no verb-structure bingo, please. In other words, don’t just state your version of this sentence. I’m less interested in that than I am in encouraging a process by which you first consider the kind of meaning you’re looking to communicate—in other words, what category of contract language would be appropriate. The verb structure you use would follow from that.
I’ll do the first part for you. See the shall in the two versions above? Each fails the “has a duty” test—you can’t replace shall with has a duty and have those sentences make sense. So we need something else. For all I know, maybe shall would work, but with a different structure.
So have at it! In a couple of days I’ll offer my version.
Update 14 May 2017: For many of you, this post brought to mind the Holy Hand Grenade bit in Monty Python and the Holy Grail, so here it is.
Update 23 May 2017: Sorry for being slow to chime in myself, but I’ve been on the road. I particularly enjoyed my stay in Gastroenteritis-land. But I knew you would play well together in my absence.
Let’s consider the options.
Language of performance? Nah. No action is being taken on signing the contract. Instead, the size of the panel is being specified. Using language of performance for this would be sort of like saying The parties hereby establish New York law as the governing law.
Language of policy? Nah. Saying The arbitral tribunal will consist of three arbitrators suggests that it’s not possible for a different number of arbitrators to be appointed, which isn’t the case. You’d have to say something like The required number of arbitrators is three, which is awkward. (And the word required is redolent of another category of contract language. Hmm, foreshadowing ….) And saying A valid arbitral tribunal will consist of three arbitrators suggests the bizarre notion of a rogue tribunal with too many or too few arbitrators.
A condition? Nah. You could say that arbitration will be valid only if it’s before a panel of three arbitrators, but that suggests, again, the possibility of a rogue arbitration happening with a different number of arbitrators.
If you rule out language of discretion, prohibition, intention, and recommendation, you’re left with obligation. What about language of obligation imposed on the subject of the sentence? Nah: even if the arbitrators are all party-appointed, the arbitral institution would have a role to play if the parties are unable to agree. So shall is out.
Language of obligation imposed on someone other than the subject of the sentence? In other words, The arbitral tribunal must consist of three arbitrators. This provision speaks to the parties and the arbitral institution, a nonparty. It just says, without specifying consequences, that arbitration with a different number of arbitrators won’t work. I’m OK with that.
I like Vance’s suggestion that you consolidate deal points. You could indeed add before a panel of three arbitrators to the provision specifying arbitration. But that would require too much surgery to the model arbitration clauses of the various arbitral institutions. I find myself proposing enough surgery as it is.
I’m sure you’ll let me know if I’m mistaken!