Article | Ten Hallmarks of Effective Arbitration Agreements with Sovereigns and State Entities

We recently came across an interesting article published at Lexology. The piece, written by Mayer Brown, LLP partner William H. Knull, III, is entitled “Ten Hallmarks of Effective Arbitration Agreements with Sovereigns and State Entities.” Here is an excerpt:

Arbitrating with sovereigns involves all of the issues inherent in proceedings between private entities plus a variety of specialized concerns. This article lists 10 of the most critical terms to ensure a level playing field in resolving a dispute with a sovereign party.

1. Unambiguous agreement to submit to arbitration. (Example: “Any dispute arising out of or relating to this agreement shall be finally resolved by arbitration …”.)
2. Explicit agreement to submit to arbitration signed by any governmental entity that may be necessary to the dispute or to enforcement of the award, including the ultimate sovereign if necessary under the circumstances. Enforcement against non-signatories cannot be presumed.
3. Strict compliance with the laws of the sovereign as to procedures to ensure that the substantive agreement, the agreement to arbitrate and the waiver of sovereign immunity by each signatory are all authorized under the sovereign’s constitution, laws and regulations. This should include, if necessary, approval by the legislature, cabinet of ministers or other ultimate authority.
4. Specification of the site of the arbitration. This should be carefully chosen for its political neutrality, the quality and reliability of its arbitration jurisprudence and the respect that its courts have for the arbitral process. If at all possible, the arbitration site should not be in the country of the counterparty.

Read the rest of the Hallmarks here.

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