Arbitration

Common pitfalls

• 1.Pathological clause — vague drafting ("disputes may be arbitrated") that courts refuse to enforce as mandatory arbitration.
• 2.Wrong seat — picking a jurisdiction where courts are hostile to arbitration or slow to enforce awards.
• 3.Institution vs ad-hoc mismatch — ad-hoc (no institution) can be cheaper but fragile without experienced counsel; institution rules add cost but structure.
• 4.Three arbitrators for a small dispute — tribunal costs triple and scheduling becomes nearly impossible. Sole arbitrator is the default for straightforward commercial disputes.
• 5.No carve-out for injunctive relief — if you might need an urgent court order (IP infringement, confidentiality breach), reserve that right in the clause.

Frequently asked questions

Is arbitration cheaper than court litigation?

Not necessarily. Arbitrator fees and institution fees often exceed court costs, especially for a tribunal of three. Arbitration can be faster and more confidential, but the cost advantage depends on the dispute value and jurisdiction. For small disputes, court is often cheaper; for cross-border disputes, arbitration almost always wins on enforceability.

Can an arbitration award be appealed?

Generally no — that is one of arbitration's defining features. Courts can set aside awards only on narrow grounds: procedural unfairness, arbitrator bias, award outside the scope of the arbitration agreement, or public policy. Substantive errors of fact or law usually cannot be appealed.

What is the New York Convention and why does it matter?

The 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards is the treaty that makes international arbitration awards enforceable in 170+ countries. Its courts routinely enforce awards from foreign seats — a huge advantage over court judgments, which depend on fragmented bilateral enforcement treaties.