Chapter 3 discusses the importance of drafting a well-crafted arbitration agreement to establish an effective private dispute resolution system outside of national courts. Various defects in arbitration agreements can lead to inefficiencies and disputes in the arbitration process. The chapter also discusses essential requirements for arbitration clauses, highlighting that short and simple clauses are generally sufficient, especially when using model clauses provided by arbitral institutions. The chapter also discusses the choices that parties make such as the number of arbitrators, their qualifications, the governing arbitration law, the language of the arbitration and the seat of arbitration. Additional clauses beyond the basic clause can also be added to provide more control, but its important to align any additions with chosen institutional rules to avoid contradicting mandatory provisions. Finally, the chapter discusses issues such as preliminary relief, technical expertise, multistep dispute resolution clauses, dispositive motions, legal fees and costs, confidentiality, expanded judicial review, and multiparty agreements.

Some industries have avoided using standard or generic arbitration clauses by developing industry-specific clauses. This chapter focuses on the energy sector and its view of arbitration as reflected in its widely used arbitration clause. Given the specificity and uniqueness of the industry, energy disputes are mostly settled through alternative dispute resolution methods. From a legal standpoint, the regulations and practices related to the energy sector are complex and chaotic due to the technical nature of the energy industry. In such a context, energy dispute resolution cases are unusually complex. Large energy transactions, projects or contracts almost always have an international dimension, and the preferred means of dispute resolution is international arbitration.