Effective Interpretation Of Defective Arbitration Clauses: An International Approach

The need to construct a defect-free arbitration clause arises from the verity that a valid arbitration clause is necessary to determine the jurisdiction of an arbitration tribunal. The existence of the arbitral tribunal’s jurisdiction decides whether the parties are bound by the award or not. This paper in Section I elaborates the need for drafting a valid arbitration clause (for the purpose of this paper only bilateral contracts are considered). Section II deals with the requirements of formal validity of an arbitration clause and factors which makes an arbitration clause pathological. Section III enumerates the perspective change from restrictive to effective interpretation of arbitration clauses. Section IV explains the necessity of common intention of the parties and the principle of effective interpretation to sustain the validity of defective arbitration clauses.