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The purpose of the arbitration clause, also called the arbitration clause, is to bind the parties to submit to arbitration any future disputes arising in connection with the execution of the contract between them. So Can you enforce a MOU in California? The lawyer will tell you that.

The arbitration clause, for which contracts

The arbitration clause can be used for any contract concluded between two professionals. In general, given its cost, this clause is used in contracts of significant importance. An arbitration clause may include incorporation into a sub-contract, a service delivery contract, a business contribution agreement, a franchise agreement, a commercial lease or a distribution agreement. You can ask the lawyer can I enforce a contract when someone promise and broke promise?  And then take decisions accordingly.

On the other hand, the arbitration clause cannot be used within the framework of a contract between a professional and an individual, or in a contract where one of the parties does not act in a professional capacity, except when it is a question ‘an international contract.

Finally, law prohibits arbitration for disputes:

  • Occurring in the context of the performance of an employment contract,
  • Relating to questions of state and capacity of persons, to divorce and legal separation or to disputes concerning public authorities and public establishments.
  • The arbitration clause covers all future disputes that may arise between the parties in connection with the execution of the contract.

What are the advantages and disadvantages of the arbitration clause?

The use of an arbitration clause makes it possible to quickly settle disputes arising between the parties to the contract, the award being normally made definitively and the possibilities of appeal being limited. Also, the award resulting from the application of an arbitration clause remains confidential this allows the sentenced party not to degrade its image publicly. In return, the arbitration clause can have a high execution cost. In practice, it therefore risks being inaccessible to one of the parties to the contract. You can also ask the lawyer, What do I need to know about non-compete contract?

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How to write an arbitration clause?

The drafting of the arbitration clause must be carried out in writing under penalty of nullity; it can be inserted directly in the contract which it concerns, or in a separate agreement which refers to it. Here are the elements to be included in this clause:

  • The procedures for appointing the arbitrator making up the arbitral tribunal. In the presence of several arbitrators, their number must be odd;
  • The procedure to be followed in the event that the arbitrator is not available or refuses to arbitrate the dispute;
  • The procedures for submitting a dispute to arbitration;
  • The course of the arbitration procedure;
  • The establishment of the arbitral award, which must be materialized in writing, and the execution of the request for exequatur.

When the arbitration clause is not used correctly, it is deemed unwritten. The contract is therefore executed as if the clause did not exist.

How is the award resulting from the application of an arbitration clause executed?

The award made by the arbitration tribunal must include:

  • names of arbitrators,
  • The date and place of its establishment,
  • The identity of the parties (surname and first name or corporate name), address (domicile or head office);
  • The respective claims of the parties and their means;

Then, for the sentence to be enforced, it must be declared enforceable. For this, a procedure known as “exequatur order” is necessary. The request must be filed by the most diligent party with the registry of the tribunal instance in the jurisdiction of the award, accompanied by a copy of the arbitration clause. The judge then decides by order to grant the exequatur or to refuse it. No appeal is possible against the order granting exequatur.