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Questions and Answers
What factors can influence the efficacy of an arbitration agreement?
The parties' ability to enforce the agreement and their commitment to arbitrate.
Which of the following could be claims regarding the challenges to international arbitration agreements? (Select all that apply)
A party can claim that no arbitration agreement exists if they never consented to it.
True
What are the grounds on which an arbitration agreement can be challenged for validity? (Select all that apply)
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What is the requirement for an arbitration agreement under Article II(1) of the New York Convention?
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The arbitration clause must be included in _______ to be recognized.
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What must the court of a Contracting State do when an action is brought regarding an arbitration agreement? (Select all that apply)
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An arbitration agreement can be deemed invalid if it is not in written form.
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Substantive validity can be challenged due to _____, misrepresentation, or fraud.
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What can lead to the invalidity of an arbitration agreement? (Select all that apply)
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What must the applicable law consider for an arbitration clause's validity?
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In the example provided, why does the French company claim that the arbitration clause is invalid?
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Study Notes
Validity of International Arbitration Agreements
- The efficiency of an arbitration agreement relies on the parties' ability to enforce it.
- After disputes arise, parties may reconsider their commitment, opting for litigation in local courts instead of arbitration.
- Challenges to international arbitration agreements can relate to their existence, validity, or scope.
Challenges to Existence, Validity, and Scope
- Existence issues arise when a party claims they never consented to any arbitration agreement, arguing no arbitration agreement exists.
- Validity challenges focus on:
- Formal invalidity, such as failure to meet written requirements.
- Substantive invalidity, including factors like unconscionability, termination, frustration, or fraud.
- International arbitration agreements must satisfy both formal and substantive validity requirements.
Formal Validity Requirements
- Article II(2) of the New York Convention mandates an agreement in writing for arbitration, covering:
- Arbitral clauses in contracts.
- Agreements signed by parties or exchanged through letters or telegrams.
- Courts must refer parties to arbitration unless the agreement is proven null, void, inoperative, or unperformable.
Substantive Validity Grounds
- Substantive invalidity grounds challenge the presumptive validity of arbitration agreements and include:
- Incapacity of parties.
- Duress or misrepresentation.
- Fraud or mistake.
Factors Affecting Validity
- The validity of arbitration clauses hinges on applicable law, which may include:
- Party-chosen law.
- Law governing the main contract.
- Lex arbitri (law of the seat of arbitration).
- An agreement may be deemed invalid due to:
- Lack of written form.
- Incapacity of parties.
- Existence of duress, misrepresentation, fraud, or mistake.
- Noncompliance with required elements in the arbitration clause.
Scope of Arbitration Agreements
- Scope challenges arise when parties agree to arbitrate specific disputes but claim the current dispute is outside that agreement.
- Example scenario:
- A contract for exclusive construction materials between a KSA-based company and a French company includes an arbitration clause.
- Dispute related to unfair competition arises, with the French company arguing the arbitration clause doesn’t cover this issue.
- The effectiveness of this claim depends on the interpretation of the arbitration clause's scope and the specifics of the disputes agreed to be arbitrated.
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Description
This quiz covers the validity of international arbitration agreements, focusing on their existence, validity, and formal requirements. It discusses common challenges such as issues of consent and formal versus substantive invalidity, emphasizing the importance of written agreements according to the New York Convention.
