How to Draft an Arbitration Clause: A Checklist for Entrepreneurs

Imagine this: you entered into a major contract and included a clause for dispute resolution through arbitration, but when a real dispute arose, the court invalidated your clause. Lawyers call such agreements "pathological." As a result, the company loses time and money, becoming embroiled in protracted government litigation.

To avoid this scenario, the arbitration clause in the contract must be formulated as precisely and unambiguously as possible. Here's a mandatory checklist for entrepreneurs:

1. Accurate name of the arbitration center
This is the most common and critical error. Avoid using abstract phrases like "Almaty Arbitration Court" or "independent arbitration." The full and official name of the institution must be included. For example: "...shall be finally resolved by the TURAN International Arbitration Center (TURAN IAC)."

2. Scope of disputes referred
The wording should cover the broadest possible range of potential disputes. It is recommended to use all-encompassing phrases: "Any dispute, controversy, or claim arising out of or in connection with this agreement, including its formation, performance, breach, termination, or invalidity..."

3. Number of Arbitrators
Determine the composition of the tribunal. Typically, a dispute is heard by a sole arbitrator or a panel of three arbitrators. A single arbitrator is a faster and more cost-effective option for standard contracts. Three arbitrators are the gold standard for complex, multi-million-dollar, and international contracts.

4. Seat of Arbitration
The seat of arbitration determines the procedural law that will apply to the proceedings. This is an important legal concept, even if the hearings themselves are held online. Specify a specific location: "The seat of arbitration shall be Almaty, Republic of Kazakhstan."

5. Language of Proceedings
This clause is critical for foreign trade transactions with foreign counterparties. Clearly indicate the language (Russian, Kazakh, English, etc.) in which procedural documents will be filed and hearings will be held to avoid incurring enormous translation costs in the future.

6. Applicable Substantive Law
Be sure to clearly state the laws of the country under which the substance of your contract will be determined. Example: "The substantive law of the Republic of Kazakhstan shall apply to this agreement."

Expert Recommendation
The most reliable way to protect your commercial interests is not to experiment with wording, but to copy the standard (recommended) arbitration clause directly from the official website of the chosen arbitration center. The standard clause from the TURAN International Arbitration Center already contains all the necessary legal elements and guarantees that your dispute will be accepted for consideration without delays or procedural obstacles.