When drafting international contracts, parties often treat the arbitration clause as a boilerplate — something to copy and paste at the end of an agreement. Yet, in practice, the arbitration clause can determine not only where a dispute is resolved but sometimes who wins it. The “seat,” the “governing law,” and the “arbitration institution” you choose can decisively shape the outcome of your case.
Does the Arbitration Clause Win the Case? — Seat, Governing Law, and Institution Choice
1. The Arbitration Clause: More Than a Formality
An arbitration clause defines how future disputes will be resolved. It determines:
- The seat of arbitration (legal place of the arbitration),
- The governing law (substantive law of the contract),
- The arbitration institution (administrative body, e.g., ICC, LCIA, ISTAC).
2. The Seat of Arbitration: The Legal Home of the Process
The seat (or “place”) of arbitration is not merely a physical location — it is the legal jurisdiction whose procedural law governs the arbitration.
For example, choosing London means English arbitration law applies, while Istanbul invokes Turkish arbitration law.
Why does this matter?
- Courts of the seat have supervisory power over the arbitration.
- The seat determines the availability of interim measures and annulment actions.
- Enforcement and neutrality concerns depend on the seat’s reputation and stability.
Thus, the “seat” can provide either a protective shield or an unexpected obstacle for one party.
3. Governing Law: The Rules of the Game
While the seat governs the arbitration procedure, the governing law regulates the substance of the contract.
It defines:
- How contractual obligations are interpreted,
- What constitutes a breach,
- The scope of damages and remedies.
Choosing a neutral and predictable governing law (e.g., English law, Swiss law, or New York law) can reduce uncertainty. Mismatched combinations — such as a Turkish seat with English governing law — are legally possible but require careful coordination to avoid procedural conflicts.
4. Arbitration Institution: Who Administers the Case
Selecting a reputable arbitration institution (e.g., ICC, LCIA, SIAC, ISTAC) can make a substantial difference.
Each institution has its own rules, fee structures, and case management systems.
For example:
- ICC Arbitration ensures strong procedural oversight and global enforceability.
- ISTAC Arbitration offers speed, cost efficiency, and modern rules for Turkish-related disputes.
- Ad hoc arbitration, in contrast, may be cheaper but riskier without institutional guidance.
A trustworthy institution can enhance the legitimacy and efficiency of the process — and sometimes, that procedural credibility influences the final outcome.
5. So, Can the Arbitration Clause Really Win the Case?
Not directly — but it can set the stage for victory or defeat.
An effective arbitration clause:
- Ensures neutrality and fairness,
- Prevents procedural deadlocks,
- Enhances enforceability of the award,
- Reduces tactical advantages of the opposing party.
In contrast, a vague or inconsistent clause can cause jurisdictional disputes, wasted costs, or even render an award unenforceable.
6. Best Practices for Drafting an Arbitration Clause
- Define the seat clearly (e.g., “The seat of arbitration shall be London, England.”)
- Specify the governing law of the contract and avoid ambiguity.
- Name a trusted arbitration institution (e.g., ICC, LCIA, ISTAC).
- State the number of arbitrators and the language of arbitration.
- Avoid hybrid or conflicting clauses that mix different systems or laws.
Conclusion
The arbitration clause is not just a procedural afterthought — it is a strategic tool.
The seat, governing law, and institution you choose will define your legal environment, influence your procedural rights, and ultimately shape your chances of success.
In international contracts, drafting a precise and balanced arbitration clause is not just smart — it’s essential to winning the case before it even begins.
